Cash withdrawal restrictions likely to go away by February-end

The RBI had recently raised the Cash withdrawallimit from ATM to Rs 10,000 a day but maintained the weekly cap at Rs 24,000 for saving account and Rs 1 lakh for current account holders.

New Delhi: With the cash crisis situation easing, Reserve Bank of India may do away with the cash weekly withdrawal limits from banks as well as ATMs by the end of next month, bankers stated.

The RBI had recently raised the Cash withdrawallimit from ATM to Rs 10,000 a day but maintained the weekly cap at Rs 24,000 for saving account and Rs 1 lakh for current account holders.

“I think the restrictions on cash withdrawal by RBI should be completely lifted by February-end or by the first half of March as cash situation is easing gradually,” Bank of Maharashtra executive director R K Gupta expressed to PTI.

It is entirely RBI’s decision and the central bank would decide after making a holistic assessment of the situation, he stated. According to SBI’s research report Ecowrap, “By the end of February, 78-88 percent of the currency could be back in the system under the best case scenario in terms of an ideal currency distribution (more small denomination notes),” the report stated, adding that “it seems within next 2 months things would be pretty close to normal.”

Another senior public sector bank official stated the situation is easing and it is a matter of weeks when the curb on withdrawal gets eased.

“My guess is that it should happen before the end of the current fiscal,” the official stated, adding, RBI has been progressively easing the curb. The RBI had earlier increased the daily cash withdrawal limit from ATMs to Rs 4,500 from Rs 2,500 effective January 1, just a day after the 50-day demonetisation period ended.

In the meantime, RBI Governor Urjit Patel could not set a time frame before the Standing Committee on Finance for the return of normalcy in the banking system even as the central bank declared that Rs 9.2 lakh crore or 60 percent of demonetised currency has been replaced.

In a surprise move on November 8, PM Narendra Modi had proclaimed demonetization of old Rs 500 and Rs 1,000 notes.

After the decision, the RBI had put restrictions on cash withdrawal from ATMs as well as from banks to deal with the shortage of new high denomination currency notes. This led to long queues at ATMs and bank branches.

All over the country, the banks had to deal with the huge rush of people who crowded their branches to deposit junked notes. The deadline for depositing old notes with banks ended on December 30.